CEDR Two Minute Trainer: Just Cause

The term “just cause” in employment law generally refers to significant employee misconduct which justifies the immediate termination of an employment contract. Most of us, however, do not have an employment contract, and instead have “at-will” employees. At-will employees can be fired for any reason, or for no reason at all, as long as the reason is not unlawful.

But even in an at-will relationship, employers might still want to establish just cause for a termination. Knowing why and when to do so is vital for avoiding liability for an employment lawsuit. Plus, in many states, when you have just cause to terminate, that fact is more likely to disqualify your ex-employee from eligibility for unemployment benefits.

First, let’s look at the factors that are often considered in determining whether just cause exists. Although it’s quite old, a 1966 analysis developed by Professor Carol Daugherty is still relevant. It involves a seven-part just cause analysis.

The Seven Just Cause Factors are the Following:

1. The employee knew of the company’s policy (signed handbook)
2. The company’s policy was reasonable
3. The company investigated to determine that the employee violated the policy
4. The investigation was fair and objective
5. Substantial evidence existed of the employee’s violation of the policy
6. The company’s policy was consistently applied
7. The discipline was reasonable and proportional (the punishment fit the crime)

That may sound overly complicated, but understanding these factors can protect you in more ways than one. The key here is that even when your employee is at-will, and you don’t need any just cause, you still are restricted from firing an employee for an unlawful reason, such as one based on their protected class (race, age, disability, religion, pregnancy, etc.) or their protected activity (filing a workers comp claim, complaining about harassment). Therefore, when you are able to establish just cause, you are in a great position to show that your action to terminate was wholly motivated by legitimate business reasons, and not any unlawful reason. Moreover, you are able to show your employee lost their job due to their own fault, and therefore they are not eligible for unemployment benefits.

Putting the Factors to the Test

Let’s consider an example. Suppose you have an employee who is over age 40, Hispanic, and female. Her performance is not up to your standards, but more importantly, she is chronically late for work and frequently misses the morning team meeting. You know you can fire someone who is always tardy, but in this situation you will also want to take a few extra minutes to think through the list of just cause factors to see if you are on solid ground.

The first two factors are critical, but easy to establish. Let’s assume you have an attendance policy in your handbook that says employees are expected to promptly show up for work for every scheduled shift. You can show knows about the attendance policy – because she signed your handbook. And yes, it’s reasonable to have an attendance policy that requires an employee to show up on time to a schedule she knew about in advance.

Looking at factors 3, 4 and 5, did you, as the employer, investigate to find out how frequently she was late? Did you check to make sure her tardiness was unexcused and that there are good records to prove it? What about prior counseling?

Then comes factor 6, the zinger: Do you apply your attendance policy consistently among all employees? Can you show that every employee who has been similarly late for work has been treated the same? Does the team leader look the other way when younger, Caucasian employees come in late?

Finally, can you show that it was reasonable to fire this employee because other corrective attempts had no effect on her, and that you have fired other employees under similar circumstances? Remember, the terminated employee may have their own story about why they were fired, even before a plaintiff’s counsel provides them with a potential list of illegal reasons for the termination!

Once a claim is made that a termination was unlawful – based on race, for instance – it will be the employer’s burden to demonstrate you had a legitimate business reason that was not just a pretext to terminate based on race. And when it’s your word against the employee’s, guess who wins? It will all come down to what was documented: corrective actions, a signed handbook, and a written termination letter giving the real reason. Had Dr. Jones won the argument with his partner in our opening example and not given a reason, he’d be hard pressed to defend himself in the event of claim.

With at-will employees, you can of course fire them without giving them a reason. But we hope that after reading this trainer you understand the importance of thinking through the seven factors in connection with disciplinary decisions, especially when the employee is in a protected group or has a protected status. A little extra time to make sure you are terminating for a proper just cause can decrease your risk of a claim being made against you, and also may give you a stronger defense in case a claim cannot be avoided.

Three Things You Can Take Away:

1. Take time to review the seven “just cause” factors any time you’re terminating someone who has a characteristic that protects them from employment discrimination.
2. Be sure that you are applying your policies consistently among all employees.
3. Don’t forget to use written counseling when addressing areas of concern or poor performance with employees, and get CEDR to help you draft a solid termination letter in the event of a termination.

Questions about a Specific Situation? Please Call Us Before Taking Action

Our staff of HR experts in the CEDR Solution Center is standing by to assist you with the difficult decisions. Call us before you take any action! CEDR HR Solutions is available by phone at 866-414-6056 or by email at info@cedrsolutions.com.